4 Bank of The Philippine Islands vs. Court of Appeals

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SUPREMECOURTREPORTSANNOTATEDVOLUME490
G.R. No. 142731. June 8, 2006.
BANK OF THE PHILIPPINE ISLANDS (formerly FAR

EAST BANK AND TRUST COMPANY), petitioner, vs.
COURT OF APPEALS and JIMMY T. GO, respondents.
Civil
Law
Obligations
Payment
Compensation
Compensation is a mode of extinguishing to the concurrent amount
the obligations of persons who in their own right and as principals
are reciprocally debtors and creditors of each other.The Court
has expounded on compensation and more specifically on legal
compensation as follows: x x x compensation is a mode of
extinguishing to the concurrent amount the obligations of persons
who in their own right and as principals are reciprocally debtors
and creditors of each other. Legal compensation takes place by
operation of law when all the requisites are present, as opposed to
conventional compensation which takes place when the parties
agree to compensate their mutual obligations even in the absence
of some requisites.
Same Same Same Same The Civil Code enumerates the
requisites of legal compensation.The Civil Code enumerates the
requisites of legal compensation, thus: Art. 1278. Compensation
shall take place when two persons, in their own right, are
creditors and debtors of each other. Art. 1279. In order that
compensation may be proper, it is necessary: (1) That each one of
the obligors be bound principally, and that he be at the same time
a principal creditor of the other (2) That both debts consist in a
sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been
stated (3) That the two debts be due (4) That they be liquidated
and demandable (5) That over neither of them there be any
retention or controversy, commenced by third persons and
communicated in due time to the debtor.
Actions Pleadings and Practice Temporary Restraining
Order It is clear from the last sentence of the section that non
working days (Saturdays, Sundays and legal holidays) are
excluded from the counting of the period only when the last day of
http://www.central.com.ph/sfsreader/session/00000152f8b1141ff1371987003600fb002c009e/t/?o=False
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the period falls on such days.A TRO is effective only for a period
of twenty days from
_______________
*
SECOND DIVISION.
169
VOL. 490, JUNE 8, 2006
169
Bank of the Philippine Islands vs. Court of Appeals
notice to the party sought to be enjoined. The rule does not specify
that the counting of the twentyday period is only limited to
working days or that Saturdays, Sundays and legal holidays are
excluded from the twentyday period. The law simply states
twenty days from notice. Section 1, Rule 22 of the Rules of Court
is pertinent, to wit: How to compute time.In computing any
period of time prescribed or allowed by these Rules, or by order of
the court, or by any applicable statute, the day of the act or event
from which the designated period of time begins to run is to be
excluded and the date of performance included. If the last day of
the period, as thus computed, falls on a Saturday, a Sunday, or a
legal holiday in the place where the court sits, the time shall not
run until the next working day. It is clear from the last sentence
of this section that nonworking days (Saturdays, Sundays and
legal holidays) are excluded from the counting of the period only
when the last day of the period falls on such days. The Rule does
not provide for any other circumstance in which nonworking days
would affect the counting of a prescribed period.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Benedicto, Verzosa, Gealogo & Burkley Law Offices
for petitioner.
Ronal E. Javier and Madayag, Caneda, Ruenata &
Associates for respondent.
AZCUNA, J.:
This is a petition for review on certiorari filed by Bank of
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the Philippine Islands of the decision and resolution of the

Court of Appeals, which in turn partially denied a petition
for certiorari questioning the temporary restraining order
(TRO) and preliminary
injunction issued by Judge Urbano
1
C. Victorio, Sr.
_______________
1
By virtue of a merger of the Bank of the Philippine Islands and Far
East Bank and Trust Company the corporate life of the

170
170
SUPREME COURT REPORTS ANNOTATED

The facts as narrated in the Court of Appeals decision are

as follows:
Petitioner, Far East Bank and Trust Company, granted a total of
eight (8) loans to Noahs Arc Merchandising (Noahs Ark, for
brevity). Per Certificate of Registration issued by the Department
of Trade and Industry (Rollo, p. 40), Noahs Ark is a single
proprietorship owned by Mr. Albert T. Looyuko. The said loans
were evidenced by identical Promissory Notes all signed by Albert
T. Looyuko, private respondent Jimmy T. Go and one Wilson Go.
Likewise, all loans were secured by real estate mortgage
constituted over a parcel of land covered by Transfer Certificate of
Title [No.] 160277 registered in the names of Mr. Looyuko and
herein private respondent. Petitioner, claiming that Noahs Ark
defaulted in its obligations, extrajudicially foreclosed the
mortgage. The auction sale was set on 14 April 1998 but on 8
April 1998 private respondent filed a complaint for damages with
prayer [for] issuance of TRO and/or writ of preliminary injunction
seeking [to] enjoin the auction sale. [I]n the Order dated 14 April
1998 a temporary restraining order was issued and in the same
order the application for Preliminary Injunction was 2 set for
hearing [i]n the afternoon of the same day (Rollo, p. 142).
3
In an order dated April 15, 1998, Judge Victorio extended

the TRO for another 15 days, for a total of 20 days. The
Court of Appeals decision continues thus:
After hearing, the 7 May 1998 Order granted the application for
preliminary injunction which shall take effect upon posting of a
bond in the amount of Two Hundred Thousand Pesos
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(P200,000.00). The dispositive portion read:

WHEREFORE, it appearing that the acts complained of would be in
violation of plaintiffs right and would work injustice to the plaintiff and
so as not to render ineffectual whatever judgment may be issued in this
case, the application [for] pre
_______________
latter has terminated and the merged entity is now called Bank of the
Philippine Islands See, Manifestation and Urgent Motion for Extension of
Time, dated April 25, 2000 CA Rollo, unnumbered.
2
Rollo, p. 39.
Records, p. 60.
171
VOL. 490, JUNE 8, 2006
171

liminary injunction is hereby granted and the defendants and all persons
acting in their behalf are hereby ordered to cease, desist, and refrain
from proceeding with the scheduled foreclosure and public auction sale of
the mortgaged property covered by TCT No. 160277 until further orders
from this Court.
This Order shall be effective upon petitioners filing of a bond in the
amount of Two Hundred Thousand Pesos (P200,000.00) to answer for any
and all damages that defendants may suffer by reason of the issuance of
the writ of preliminary injunction.
As prayed for, defendants are hereby directed to file their answer on or
before May 14, 1998. Copy furnished plaintiff.
SO ORDERED. (Rollo, p. 175)
Privaterespondent then filed a bond as required by the order.

Petitioner moved for a reconsideration of the aforementioned
order which motion was denied in the Order dated 30 July 1998
on the ground that the extrajudicial foreclosure was premature as
to four (4) promissory notes. The dispositive portion read:
WHEREFORE, premises considered, the motion for reconsideration is
hereby denied and the other pending incident pertaining thereto are
noted and this case be set for pretrial.
LET THEREFORE, a notice of pretrial be sent to the parties.
4
SO ORDERED. (Rollo, p. 219)
After petitioners motion for reconsideration was denied in

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an order dated July 30, 1998, petitioner filed a petition for

certiorari with the Court of Appeals, praying that the
orders dated May 7, 1998 and July 30, 1998, granting the
writ of preliminary injunction and denying the motion for
reconsideration, respectively, be annulled and set aside and
the writ of preliminary injunction be dissolved.
Furthermore, petitioner asked to be allowed to proceed
with the auction sale of the property.
_______________
4
Rollo, pp. 3941.

172
172

The Court of Appeals promulgated its decision dated

August 26, 1999 which partially denied the petition for
certiorari, stating as follows:
The issue in this case is: Whether the trial court erred in the
issuance of the Writ of Preliminary Injunction or not.
Petitioner averred that private respondent had not shown any
right which should be protected by an injunction. Private
respondent naturally claimed otherwise and asserted that since
four (4) of the promissory notes have not yet matured there was
no basis to foreclose the mortgage (Comment, p 15). He also
claimed that his right to due process entitles him to legal demand
prior to the filing of the foreclosure proceedings against the
subject property (Comment, p. 16).
It has been held that an injunction may be issued in order to
preserve the status quo. Thus, in Cagayan de Oro City Landless
Residents Association, Inc. v. Court of Appeals (254 SCRA 220
[1996]) it was held:
As an extraordinary remedy, injunction is calculated to preserve the
status quo of things and is generally availed of to prevent actual or
threatened acts, until the merits of the case can be heard. x x x (254
SCRA 228).
In the case at bar, there is a need to first settle the question of

whether the demand made by petitioner was sufficient to render
private respondent in default or not. In Rose Packing Co., Inc. v.
Court of Appeals (167 SCRA 309 [1988]) it was held that the
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question of whether the debtor is in default should first be settled

to determine if the foreclosure was proper. In the same case it was
also held that said question should be resolved by the trial court,
to wit:
While petitioner corporation does not deny, in fact, it admits its
indebtedness to respondent bank (Brief for Petitioner, pp. 711), there
were matters that needed the preservation of the status quo between the
parties. The foreclosure sale was premature.
First was the question of whether or not petitioner corporation was
already in default.
xxx
173
VOL. 490, JUNE 8, 2006
173

Petitioner corporation alleges that there had been no demand on the part
of respondent bank previous to its filing a complaint against petitioner
and Rene Knecht personally for collection on petitioners indebtedness
(Brief for Petitioner, p. 13). For an obligation to become due there must
generally be a demand. Default generally begins from the moment the
creditor demands the performance of the obligation. Without such
demand, judicial or extrajudicial, the effects of default will not arise.
(Namarco v. Federation of United Namarco Distributors, Inc., 49 SCRA
238 [1973]) Borje v. CFI of Misamis Occidental, 88 SCRA 576 [1979].
Whether petitioner corporation is already in default or not and whether
demand had been properly made or not had to be determined in the lower
court. (167 SCRA 317318)
We now come to the matter of sufficiency of the bond filed by

private respondent. Petitioner claims that the P200,000.00 bond
is grossly insufficient. It argued, thus:
By enjoining petitioner from conducting the auction sale of the mortgaged
property, petitioner has already suffered damages in the amount of
P715,077.78 representing filing and publication fees. Yet damages to be
incurred by petitioner by reason of the injunction are not limited to filing
and publication fees, granting that the case will drag on for more tha[n] a
year, which is usually the case. The injunction would deprive petitioner
FEBTC of its own income from the foreclosed property or from the
proceeds of the foreclosure sale. Obviously it is easily more than
P200,000.00 (Rollo, p. 31).
The Court agrees with petitioner that the amount of the bond
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is insufficient. In Valencia v. Court of Appeals, (263 SCRA 275

[1996]) the Supreme Court explained that the bond is for the
protection against loss or damage by reason of the injunction, to
wit:
The said bond was supposed to answer only for damages which may be
sustained by private respondents, against whom the mandatory
injunction was issued, by reason of the issuance thereof, and not to
answer for damages caused by the actuations of petitioner, which may or
may not be related at all to the implementation of the mandatory
injunction. The purpose of the injunction bond is to protect the defendant
against loss or damage by reason of the injunction in case the court
finally
174
174

decides that the plaintiff was not entitled to it, and the bond is usually
conditioned accordingly. Thus, the bondsmen are obligated to account to
the defendant in the injunction suit for all damages, or costs and
reasonable counsels fees incurred or sustained by the latter in case it is
determined that the injunction was wrongfully issued. (263 SCRA 288
289)
Private respondents contention that considering the market

value of the property, the bond is reasonable and proper (Rollo, p.
240) cannot be upheld considering that no proof of the value of the
property was even presented to buttress this assertion.
However, the insufficiency of the amount of the bond
prescribed by the trial court does not warrant the lifting of the
writ of injunction. The Court notes that under Section 7, Rule 58
of the 1997 Rules of Civil Procedure the applicant, in case the
bond is insufficient, may still file one sufficient in amount, to wit:
Sec. 7. Service of copies of bond effect of disapproval of same.x x x. If
the applicants bond is found to be insufficient in amount, or if the surety
or sureties thereon fail to justify, and a bond sufficient in amount with
sufficient sureties approved after justification is not filed forthwith, the
injunction shall be dissolved. x x x.
The Court considers a bond of Five Million Pesos (P5,000,000.00) to be
more appropriate in the present case.
WHEREFORE, considering the foregoing premises the petition for
certiorari is DENIED however, private respondent is ordered to file an
injunctive bond in the amount of P5,000,000.00.
5
SO ORDERED.
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5
SO ORDERED.
Petitioner filed a motion for reconsideration which was

denied in a resolution dated April 3, 2000 by the Court of
Appeals on the ground that all the matters raised in the
motion for reconsideration
had already been passed upon in
6
the decision.
_______________
5
Rollo, pp. 4145.
Id., at p. 47.
175
VOL. 490, JUNE 8, 2006
175
Petitioner filed the instant petition for review on certiorari

questioning the August 26, 1999 decision and the April 3,
2000 resolution. The following issues were raised by
petitioner:
3.1. Whether the Honorable Court of Appeals can
resolve the issue of the sufficiency of demand.
3.2. Whether private respondent Go is entitled to a
temporary restraining order and a writ of
preliminary injunction.
3.3. Whether the Complaint of private respondent Go
has been rendered moot and academic.
For the purpose of clarity, the issues are restated thus:
1. Whether or not the private respondent was entitled
to the TRO and writ of preliminary injunction.
2. Whether or not the TRO and writ of preliminary
injunction were properly issued by Judge Victorio.
On the first issue, this Court finds that private respondent
was not entitled to the TRO and the writ of preliminary
injunction. Section 3 of Rule 58 of the Rules of Court
provides the grounds for the issuance of a preliminary
injunction, to wit:
A preliminary injunction may be granted when it is established:
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(a) That the applicant is entitled to the relief demanded, and

the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either
for a limited period or perpetually
(b) That the commission, continuance or nonperformance of
the act or acts complained of during the litigation would
probably work injustice to the applicant or
(c) That a party, court, agency or person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation
of the rights of the applicant
176
176

respecting the subject of the action or proceeding,

and tending to render the judgment ineffectual.
As will be discussed below, private respondent is not
entitled to the relief of injunction against the extrajudicial
foreclosure and auction sale. Neither are the extrajudicial
foreclosure and auction sale violative of private
respondents rights.
Private respondent claimed that demand was not made
upon him, in spite of the fact that he cosigned the
promissory notes. He also argues that only four of the eight
promissory notes secured by the mortgage had become due.
A reading of the promissory notes discloses that as co
signor, private respondent waived demand. Furthermore,
the promissory notes contain an acceleration clause, to wit:
Upon the happening of any of the following events, FAR EAST
BANK AND TRUST COMPANY or the holder, may at its option,
forthwith accelerate maturity and the unpaid balance of the
principal, as well as interest and other charges which have
accrued, shall become due and payable without demand or
notice[:] (1) default in payment or performance of any obligation of
any of the undersigned to FAR EAST BANK AND TRUST
COMPANY or its affiliated companies
xxx
I/We hereby waive any diligence, presentment, demand,
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protest or notice of nonpayment

o[r] dishonor with respect to this
7
note or any extension thereof. (Emphasis added)
_______________
7
Rollo, pp. 5057.

177
VOL. 490, JUNE 8, 2006
177

8
The Civil Code in Article 1169 provides that one incurs in

delay or is in default from the time the obligor demands the
fulfillment of the obligation from the obligee. However, the
law expressly provides that demand is not necessary under
certain circumstances, and one of these circumstances is
when the parties expressly waive demand. Hence, since the
cosignors expressly waived demand in the promissory
notes, demand was unnecessary for them to be in default.
Private respondent further argues that by withholding
the lease payments Far East Bank and Trust Company
(FEBTC) owed Noahs Ark for the space FEBTC was
leasing from Noahs Ark and applying said amounts to the
outstanding obligation of Noahs Ark, as expressed
in a
9
letter from FEBTC dated May 19, 1998, FEBTC has
waived default, novated the contract of loan as embodied in
the promissory notes and is
_______________
8
ART. 1169. Those obliged to deliver or to do something incur in delay
from the time the obligee judicially or extrajudicially demands from them
the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
(1) When the obligation or law expressly so declare x x x.
9
NOAHS ARK BUILDING
Escolta, Manila
Attention : MS. JULIET T. GO
Administrator
This is to inform you that in view of the nonpayment of Noahs Ark
Merchandising of its loan obligation with Far East Bank and Trust Company, we
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have withheld the February 1998 to May 1998 rental payments to your office and
have correspondingly applied said amount to the outstanding obligation of Noahs
Ark Merchandising. We will continue to do so for the succeeding months until such
time said loan is fully settled.
Please note that we have not been delinquent in our rental payments and
should not be charged with penalties for nonremittance of the same. x x x
178
178

therefore estopped from foreclosing on the mortgaged

property.
This Court disagrees. FEBTCs act of withholding the
lease payments and applying them to the outstanding
obligation of Noahs Ark is merely an acknowledgement of
the legal compensation that occurred by operation of law
between the parties. The Court has expounded on
compensation and more specifically on legal compensation
as follows:
x x x compensation is a mode of extinguishing to the concurrent
amount the obligations of persons who in their own right and as
principals are reciprocally debtors and creditors of each other.
Legal compensation takes place by operation of law when all the
requisites are present, as opposed to conventional compensation
which takes place when the parties agree to compensate
their
10
mutual obligations even in the absence of some requisites.
The Civil Code enumerates the requisites of legal

compensation, thus:
Art. 1278. Compensation shall take place when two persons, in
their own right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is
necessary:
(1) That each one of the obligors be bound principally, and
that he be at the same time a principal creditor of the
other
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated
(3) That the two debts be due
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(4) That they be liquidated and demandable

(5) That over neither of them there be any retention or
controversy, commenced by third persons and
communicated in due time to the debtor.
_______________
10
PNB MADECOR v. Uy, 415 Phil. 348, 359 363 SCRA 128, 139
(2001).
179
VOL. 490, JUNE 8, 2006
179
It is clear from the facts that FEBTC and Noahs Ark are
both principal obligors and creditors of each other. Their
debts to each other both consist in a sum of money. As
discussed above, the eight promissory notes of Noahs Ark
are all due and the lease payments owed by FEBTC
become due each month. Noahs Arks debt is liquidated
and demandable and FEBTCs lease payments are
liquidated and are demandable every month as they fall
due. Lastly, there is no retention or controversy
commenced by third persons over either of the debts.
Novation did not occur as private respondent argued.
The Court has declared that a contract cannot be novated
in the 11absence of a new contract executed between the
parties. The legal compensation, which was acknowledged
by FEBTC in its May 19, 1998 letter, occurred by operation
of law, as discussed above. As a consequence, it cannot be
considered a new contract between the parties. Hence, the
loan agreement, as embodied in the promissory notes and
the real estate mortgage, subsists.
Since the compensation between the parties occurred by
operation of law, FEBTC did not waive Noahs Arks
default.
As a result of the absence of novation or waiver of
default, FEBTC is therefore not estopped from proceeding
with the foreclosure.
Private respondent further argues in his memorandum
that FEBTC was in bad faith when it initiated the
foreclosure proceedings because Noahs Ark had been
requesting for accounting and reconciliation of its account
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and the application of interest payment, and that there

were ongoing negotiations with FEBTC for the settlement
and restructuring of the loan obligation. From the evidence
on hand, it is clear that FEBTC was acting within its
rights. Private respondent did not present any other
agreement signed by the parties subse
_______________
11
Bert Osmea & Associates Inc. v. Court of Appeals, 205 Phil. 328 120
SCRA 395 (1983) Tiu Siuco v. Habana, 45 Phil. 707 (1924).

180
180

quent to the promissory notes and mortgage contract which

can be considered as replacing, altering, or novating the
contractual rights between the parties. Even if Noahs Ark
was trying to seek an accounting and reconciliation of its
account and even if it was trying to negotiate a
restructuring of its loan obligation, it cannot deny the fact
that it had already defaulted on the entire loan obligation.
This gave FEBTC the right to exercise its contractual
rights to foreclose on the security of the debt, which in this
case was the real estate mortgage subject of this case.
FEBTC was therefore just exercising its contractual rights
when it initiated foreclosure proceedings and cannot be
considered to have acted in bad faith.
With regard to the second issue, this Court finds that
the TRO and the writ of preliminary injunction were
improperly issued by Judge Victorio. First of all, on
substantive grounds, as discussed above, private
respondent was not entitled to the TRO and the writ of
preliminary injunction.
Second, the issuance of the TRO was, on procedural
grounds, irregular. Section 5, Rule 58 of the Rules of Civil
Procedure provides:
Preliminary injunction not granted without notice exception.No
preliminary injunction shall be granted without hearing and prior
notice to the party or person sought to be enjoined. If it shall
appear from facts shown by affidavits or by the verified
application that great or irreparable injury would result to the
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applicant before the matter can be heard on notice, the court to

which the application for preliminary injunction was made, may
issue a temporary restraining order to be effective only for a
period of twenty (20) days from notice to the party or person
sought to be enjoined. Within the said twentyday period, the
court must order said party or person to show cause, at a specified
time and place, why the injunction should not be granted,
determine within the same period whether or not the preliminary
injunction shall be granted, and accordingly issue the
corresponding order.
Judge Victorio, in an order dated April 14, 1998, issued a

TRO for five days, then, in an order dated April 15, 1998,
181
VOL. 490, JUNE 8, 2006
181
extended it for fifteen more days, totaling twenty days.

However, in the first order, Judge Victorio excluded
Saturdays and Sundays and in the latter order he added
legal holidays to the exclusions. As quoted above, a TRO is
effective only for a period of twenty days from notice to the
party sought to be enjoined. The rule does not specify that
the counting of the twentyday period is only limited to
working days or that Saturdays, Sundays and legal
holidays are excluded from the twentyday period. The law
simply states twenty days from notice. Section 1, Rule 22 of
the Rules of Court is pertinent, to wit:
How to compute time.In computing any period of time
prescribed or allowed by these Rules, or by order of the court, or
by any applicable statute, the day of the act or event from which
the designated period of time begins to run is to be excluded and
the date of performance included. If the last day of the period, as
thus computed, falls on a Saturday, a Sunday, or a legal holiday
in the place where the court sits, the time shall not run until the
next working day.
It is clear from the last sentence of this section that

nonworking days (Saturdays, Sundays and legal holidays)
are excluded from the counting of the period only when the
last day of the period falls on such days. The Rule does not
provide for any other circumstance in which nonworking
days would affect the counting of a prescribed period.
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Hence, Judge Victorio exceeded the authority granted to

lower courts, in Section 5, Rule 58 of the Rules of Court,
when he excluded nonworking days from the counting of
the twentyday period.
In sum, private respondent was not entitled to the TRO
nor to the preliminary injunction, and the period granted in
the TRO issued by Judge Victorio exceeded that prescribed
in the Rules of Court.
182
182

WHEREFORE,
the petition
is GRANTED and the
12
13
decision and resolution of the Court of Appeals dated
August 26, 1999 and April 3, 2000, respectively, are
PARTIALLY REVERSED and SET ASIDE, retaining only
the portion which increases the amount of the injunctive
bond to Five Million Pesos (P5,000,000). The writ of
preliminary injunction
issued by Judge Urbano C. Victorio,
14
Sr., in an order dated May 7, 1998 in Civil Case No. 98
88266, is hereby DISSOLVED. No costs.
SO ORDERED.
Puno (Chairperson), SandovalGutierrez, Corona
and Garcia, JJ., concur.
Petition granted, judgment and resolution partially
reversed and set aside.
Note.Compensation shall take place when two
persons, in their own right, are creditors and debtors of
each other, provided the proper requisites are present. (Re:
Properties Proposed to be Purchased by Associate Justice
Jose C. Vitug, 439 SCRA 509 [2004])
o0o
_______________
12
Rollo, pp. 3845.
13
Id., at p. 47.
14
Records, pp. 113115.

183
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VOL. 490, JUNE 8, 2006
183
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2/19/2016

G.R. No. 142731. June 8, 2006.

BANK OF THE PHILIPPINE ISLANDS (formerly FAR

VOL. 490, JUNE 8, 2006

Bank of the Philippine Islands vs. Court of Appeals

PETITION for review on certiorari of the decision and

the Philippine Islands of the decision and resolution of the

By virtue of a merger of the Bank of the Philippine Islands and Far

East Bank and Trust Company the corporate life of the

SUPREME COURT REPORTS ANNOTATED

The facts as narrated in the Court of Appeals decision are

In an order dated April 15, 1998, Judge Victorio extended

(P200,000.00). The dispositive portion read:

VOL. 490, JUNE 8, 2006

Bank of the Philippine Islands vs. Court of Appeals

Privaterespondent then filed a bond as required by the order.

SO ORDERED. (Rollo, p. 219)

After petitioners motion for reconsideration was denied in

an order dated July 30, 1998, petitioner filed a petition for

Rollo, pp. 3941.

SUPREME COURT REPORTS ANNOTATED

The Court of Appeals promulgated its decision dated

In the case at bar, there is a need to first settle the question of

question of whether the debtor is in default should first be settled

VOL. 490, JUNE 8, 2006

Bank of the Philippine Islands vs. Court of Appeals

We now come to the matter of sufficiency of the bond filed by

is insufficient. In Valencia v. Court of Appeals, (263 SCRA 275

SUPREME COURT REPORTS ANNOTATED

Private respondents contention that considering the market

Petitioner filed a motion for reconsideration which was

Rollo, pp. 4145.

VOL. 490, JUNE 8, 2006

Bank of the Philippine Islands vs. Court of Appeals

Petitioner filed the instant petition for review on certiorari

(a) That the applicant is entitled to the relief demanded, and

SUPREME COURT REPORTS ANNOTATED

respecting the subject of the action or proceeding,

protest or notice of nonpayment

Rollo, pp. 5057.

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Bank of the Philippine Islands vs. Court of Appeals

The Civil Code in Article 1169 provides that one incurs in

ART. 1169. Those obliged to deliver or to do something incur in delay

NOAHS ARK BUILDING

SUPREME COURT REPORTS ANNOTATED

therefore estopped from foreclosing on the mortgaged

The Civil Code enumerates the requisites of legal

(4) That they be liquidated and demandable

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Bank of the Philippine Islands vs. Court of Appeals

and the application of interest payment, and that there

SCRA 395 (1983) Tiu Siuco v. Habana, 45 Phil. 707 (1924).

SUPREME COURT REPORTS ANNOTATED

quent to the promissory notes and mortgage contract which

applicant before the matter can be heard on notice, the court to

Judge Victorio, in an order dated April 14, 1998, issued a

VOL. 490, JUNE 8, 2006

Bank of the Philippine Islands vs. Court of Appeals

extended it for fifteen more days, totaling twenty days.

It is clear from the last sentence of this section that

Hence, Judge Victorio exceeded the authority granted to

SUPREME COURT REPORTS ANNOTATED